Quantity and Quality for the NFL
By Adam Grossman
The fact that the National Football League (NFL) generated $1.25 billion in sponsorship revenue this year is both impressive and surprising. The NFL’s revenue was 4.3% higher during the 2016 season than it was during the 2015 season even though the year-over-year regular season television ratings dropped by 9%, while the playoff ratings fell by 6%. How is it possible that the NFL generated more money from sponsorships when it seemingly has less interest from fans (at least from television broadcasts)?
The first reason was the NFL was still able to generate many of the highest rated single telecasts for all television programming (not just sports). In 2016 alone, five of the year’s top 10 telecasts featured NFL games or content. So while NFL ratings may have been down by the league’s high standards, the NFL was still able to attract very large audiences.
As I wrote about in the book Sports Business Analytics: Using Data to Increase Revenue and Improve Operational Efficiency, there are typically six channels in which sports sponsorship are activated. These are: in-venue, traditional media (television, radio, newspaper), digital media, social media, event marketing, and intellectual property (naming rights deals, jersey rights deals, logos). The NFL in particular has made a big push into digital streaming and social media as demonstrated by its partnership with Twitter this past season to stream live games on the platform. Evaluating the level of fan interest / engagement with a league by only examining a single channel misses the larger picture and does not make sense in this context.
However, the larger point here is that discussion about sponsorship revenue and sponsorship value should not only rely merely on quantity of impressions generated. While the size of the audience is still important, corporate sponsors are increasingly looking at the quality of the sports fans demographics. In particular, corporate partners are looking for how a league can help them generate more money and achieve their overall brand / marketing goals. Not only does the average football fan make $66,300 in annual revenue, but also the NFL attracts the greatest percentage of female fans of any major professional American sports league according to SBRnet.
Relying solely on the number of impressions on television is not the best measure of a league’s overall fan engagement. Taking a cross-channel and qualitative approach to evaluating corporate partnerships shows why the NFL was able to increase its overall revenue in 2016 despite decreased television viewership.